Warner Bros. Discovery posted an expected fourth-quarter $2.1 billion net loss due to acquisition costs resulting from the merger of Warner Media and Discovery Inc., the restructuring of the company, and continued losses from its direct-to-consumer (D2) business.
In the fourth quarter a year ago, WBD posted $91 million in net income.
Company executives said they continue to cut debt from its balance sheet. The company has repaid $7 billion since April, when the merger of the two companies closed.
Quarterly revenues sank 9% to $11 billion -- below analysts' estimates. Adjusted cash flow -- earnings before interest, taxes, depreciation and amortization -- was down 2% to $2.6 billion.
For its closely watched D2C business, the company witnessed sequential subscriber growth in the fourth quarter of 1.1 million to total 96.1 million global subscribers. There are now 54.6 million U.S. subscribers and 41.5 million international subscribers. This was largely attributable to HBO Max being re-added onto streaming distributor Amazon Channels.
Ashwin Navin, chief executive officer of Samba TV, says growth for any premium streamer in a tough and highly competitive marketplace comes with multiple must-see TV series to keep subscriber churn to a minimum.
“Our data indicates that HBO Max is faring slightly better than most other streamers in delivering multiple programs of interest to viewers that will help stave off churn,” Navin tells Television News Daily. Navin says, for example, that franchises such as "House of the Dragon" have become appointment viewing.
Also, “the most recent season of ‘The White Lotus’ for example was among the top three streaming premieres in the second half of 2022 and the show continued to draw in new audiences week after week to the service.”
For HBO Max, Discovery+, and other company streaming efforts, quarterly revenue was up 6% to $2.5 billion -- with advertising 75% higher to $123 million and distribution inching up 2% to $2.1 billion.
And while negative adjusted cash flow (EBITDA) showed a $217 million loss, this was down from losses of $728 million in the year-ago period.
This spring, the company intends to have a combined HBO Max with Discovery+, as well as a stand-alone option for Discovery+ alone.
Looking more broadly at the entire 2022 year, D2C revenues were up 6% to $7.3 billion. Negative cash flow is now at $1.6 billion for the year, surpassing $1.3 billion in the year-ago period.
At the same time, the company's linear TV business continued to suffer -- with ad revenue sinking 14% to $2.2 billion due to audience declines at its general entertainment networks and an overall softer U.S. ad market.
Distribution revenue slipped 2% to $2.9 billion, due to continued declines in U.S. pay TV subscribers as well as in some European markets.
Total linear TV network revenues were down 6% to $5.51 billion for the quarter and off 2% for the year at $19.3 billion versus 2021.
Before its earnings release, the company's stock closed up 2% to $15.73 on Thursday. After hours trading witnessed its stock slipping 1.5%.